U.S. stock markets opened with mixed performance on Tuesday as heavyweight technology stocks extended their declining trend, with indices showing overall weak consolidation throughout the trading session and closing with mixed results.
At the close of trading, the Dow Jones Industrial Average rose 16.04 points to 44,938.31, gaining 0.04%. The S&P 500 Index fell 15.59 points to 6,395.78, declining 0.24%. The Nasdaq Composite Index dropped 142.095 points to 21,172.857, down 0.67%.
Among sectors, seven of the eleven major S&P 500 sectors posted gains while four declined. The energy sector and consumer staples sector led the gains with advances of 0.86% and 0.80% respectively, while consumer discretionary and technology sectors led the declines with drops of 1.18% and 0.77% respectively.
The Federal Reserve released minutes from its late July monetary policy meeting on Tuesday, showing that Fed officials generally expect inflation to rise in the near term. Most Fed officials believe inflation upside risks outweigh employment market downside risks, though there are disagreements about the magnitude of tariff impacts on prices and inflation persistence. Meeting participants noted that if elevated inflation proves more persistent while employment market prospects weaken, the Federal Open Market Committee may face difficult trade-offs.
Carol Schleif, Chief Strategist at BMO Private Wealth Management, noted that given the strong rally in technology stocks previously, with some stocks gaining over 80% from their early April lows, it's not surprising that some investors are taking profits. Trading volumes typically decline in late August, leading to price swings that exceed fundamental justifications. Schleif added that if Powell takes a more hawkish stance at the Jackson Hole central bank symposium, it could put further pressure on tech stocks, as sustained high interest rates are generally negative for the technology sector.
Jerry Chen, Senior Analyst at FOREX.com, stated that after experiencing the impact of "reciprocal tariffs" in April, investors understand that financial markets are among the few areas of Trump's genuine concern. Therefore, markets place more faith in the "Trump put" rather than the theoretical Fed put, which explains why U.S. stocks have repeatedly hit new highs since April, disconnected from fundamentals. Barring major surprises or negative developments, buying dips after moderate corrections remains applicable for U.S. stocks.
In individual stock performance, heavyweight stocks continued their decline, with Apple, Alphabet, Amazon, and Broadcom all falling more than 1%. U.S. retail giant Target reported second-quarter earnings and sales that exceeded expectations but reaffirmed its previously lowered full-year outlook and announced the appointment of a new CEO. Target's stock price declined significantly by 6.33% on Tuesday.
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